State budget shows winners and losers for local cities and towns

Gov. Ned Lamont’s proposed budget keeps level funding statewide for municipal and education aid, but there would be definite winners and losers locally, as new proposed teacher pension contributions vary widely.

New London and Norwich — both Alliance Districts receiving added school funding and Distressed Municipalities — would see major overall increases in Lamont’s proposed two-year budget. Groton, East Lyme, Waterford and Stonington would see decreases, with teacher pension costs a major factor.

Lamont’s budget documents released Wednesday include calculations for the new proposal to have municipalities pay a portion of teacher retirement costs going forward, affecting grant totals. Lamont said the proposal by former Gov. Dannel P. Malloy to charge towns retroactively for past teacher pension costs “is not fair.”

The new proposal calls for most towns to pay 25 percent of the teachers’ pensions. Cities and towns that pay teachers above the state average in “pensionable salaries” would pay higher percentages, and the state’s 25 designated distressed municipalities — including Norwich, New London, Montville and Preston — would pay only 5 percent of their pension costs.

The state’s biennial budget shows a jump in funding for New London in each of the next two years. New London’s municipal and education funding would increase by $897,000 for fiscal year 2019-20, to $37 million. Funding would increase by $1.9 million, to more than $38 million, in fiscal year 2020-21.

At first glance, New London Mayor Michael Passero said, it appears the governor is keeping a campaign promise to focus on the financial health of cities.

“Certainly, the highlights (of the state budget) indicate he has made an attempt to understand the needs of the cities of the state,” Passero said.

Passero said the increases in education funding also are encouraging. “That’s an investment in our education,” he said. 

However, Lamont is "also asking us to assume some of the costs of the teachers’ pensions," Passero said. "We have to analyze where we come out in the end. I’m waiting to get more details.”

The budget shows boosts to New London’s Education Cost Sharing and Alliance grant funding. Alliance grant funds would increase from $3.36 million to $4.44 million in 2019-20 and $5.5 million in 2020-21. ECS funds would increase from $26.3 million to $27.4 million in 2019-20 and to $28.5 million in 2020-21.

Norwich would see an overall grant increase of $1.03 million in 2019-20, and $2.1 million in 2020-21. The Alliance District grant would increase from $4.4 million this year to $5.6 million in 2019-20 and $6.79 million in 2020-21.

“The increase in Alliance District (funds) is helpful and needed,” Norwich Superintendent Abby Dolliver said. “We rely on 50 percent of our staff paid by grants. Alliance is really critical. It’s really to maintain what we have.”

Groton would see an overall drop in state aid of $325,457 next year and a drop of $632,438 in 2020-21, mostly due to Groton being slated to pay $288,219 in teacher pension costs next year and $595,200 in 2020-21.

“I am looking forward to negotiating in the next few months to get a budget with fair funding for the towns I represent,” said state Rep. Christine Conley, D-Groton. “The 25 percent of the cost of teachers' pensions is a big impact to each and every town in the state ... so I would expect our town leaders to be working with me and the governor’s office to find a fair resolution for the budget.”

State Sen. Heather Somers, R-Groton, said she is hopeful bipartisan cooperation with the governor could craft a budget more palatable to municipalities and working people. She said pushing a portion of the teacher pension costs onto municipalities only would result in higher property taxes, and along with tolling and taxes on everything from car seats to legal services, would hurt the state's ability to attract new residents.

"How are we going to attract new people to come here with the expansion of Electric Boat, etc., when they are coming from southern states?" she asked. Two people recently told her they would have to earn 30 percent more to live in Connecticut, she said.

Sen. Cathy Osten, D-Sprague, said that, at first blush, it does not appear the budget eviscerated funding for any municipality, and cities like Norwich and New London found needed revenue for their educational systems. But she said she will be doing a detailed review to understand the policy and the overall impact on municipalities. The Appropriations Committee will meet Thursday with the Office of Policy and Management secretary to ask questions and get data.

State Sen. Paul Formica, R-East Lyme, said the teachers' pension payments will add another expense for school boards and municipalities. He also said other proposals would have an impact on the region, calling it disappointing that a reduction in boat taxes that tripled sales for marinas along the shoreline was raised back to the 6.35 percent rate.

East Lyme would see an overall drop of $824,375 in state aid in 2019-20 and $1.5 million in the second year. The town’s ECS grant would total $5.76 million next year, a drop of $680,421. In the second year, the ECS grant would drop $1.25 million from its current level. And East Lyme would pay $123,073 in teacher pension costs next year and $254,157 in the second year.

Norwich, by comparison, would pay $37,069 in teacher pension costs next year and $76,551 the following year.

Stonington's overall state aid would drop by $466,765 next year and by $919,741 in the second year. The town would be charged $100,054 for teacher pensions next year and $206,621 in 2020-21.

Small school districts

The Connecticut Council of Small Towns called the proposed budget “a mixed bag for small towns.” COST Executive Director Betsy Gara said it’s unfair to charge towns for pension costs set in state statutes, not by municipalities.

“These additional costs, coupled with little or no growth in local grand lists, will put untenable pressure on property tax levels. Although costs will be phased in over three years, towns must be given the authority to manage teachers’ pension costs to minimize the impact on property taxpayers,” she said.

Lamont’s budget calls for a School Services and Redistricting Commission to study “economies of scale," including sharing superintendents, staff, services and redistricting. A small school district that retains its own superintendent might see a reduction in ECS funding after July 1, 2020, according to the budget plan.

“Small local school districts that choose to have inefficient governance structures, and too many expensive superintendents, can no longer expect the state to bear the costs of these decisions,” Lamont said in his budget plan.

Gara said small towns would be open to discussion about increased efficiencies, but “we remain opposed to efforts to force the consolidation of school districts or penalize school districts simply because they are small.”

Day Staff Writer Greg Smith contributed to this report.

c.bessette@theday.com

k.drelich@theday.com

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